Major state hospice company owner charged with fraud

CHICAGO (AP) – An owner of a major Illinois hospice-care provider encouraged subordinates to extend end-of-life care to patients who weren’t actually terminally ill and to fraudulently switch to categories of care that would generate far higher Medicare and Medicaid payments, according to federal charges announced Monday.

Seth Gillman, 45 and part owner of Lisle-based Passages Hospice, LLC, would reprimand and even fire workers who dared raise red flags about the policies, according to the criminal complaint. He allegedly snapped at one employee who complained someone slated by Passages for hospice care was not actually dying, “Keep your mouth shut and do what I tell you.”

Gillman, of Lincolnwood, appeared Monday in federal court in Chicago to hear the charges: one count each of health care fraud and obstructing a federal audit. He will enter a plea at a later hearing. Gillman, who was released on $150,000 bond, did not comment to reporters after the hearing, and messages left at Passages’ headquarters seeking comment weren’t returned.

Someone qualifies for hospice care if they are diagnosed with a disease that’s likely to result in their death within 6 months or less. In one instance, the complaint says Passages submitted hospice-care bills for a woman for 4 years, even though her doctors never told her she was terminally ill until the last few months of her life, her son later told investigators.

Gillman allegedly instructed Passages nurses, who care for hospice patients in nursing homes and private residences throughout Illinois, to find ways to change care categories from “routine inpatient care” to the more intensive and more profitable “general inpatient care.” Medicare reimbursed a general-care hospice patient at around $670 per day, which is more than four times the rate for routine-care patients.

Gillman allegedly kept the pressure on to generate higher profits.

The complaint describes how one manager was ordered to explain to attendees at a Passages’ holiday party that the company’s practices were sound. But when she began distributing handouts on what constitutes medical fraud instead, she was fired. Another time, in an email about the prospect of diminished profits, Gillman allegedly wrote, “No way am I gonna lose money on this. ... I need the extra $ for blackjack.”

Passages was paid approximately $95 million from Medicare and approximately $30 million from Medicaid from 2006 to 2011, the complaint says. It doesn’t specify how much of that the company allegedly made through fraud.

If convicted, Gillman could face up to 15 years in prison. A status hearing was set for Feb. 3.